08-07-2013, 12:27 AM
Excellent points Tree. And if one goes back and reads the statement that was issued by O'Neill, in retrospect some things become more clear:
http://www.pngindustrynews.net/web_multi...ject_2.pdf
This speaks specifically to EA and so far the talks with XOM have centered on EA (drilling, development, etc). I believe that possibly this whole scenario was anticipated by the government and that the 3rd train of PNG LNG was very high on the list. The government stated, "... the project may be commercialized equally and simultaneously on a 50/50 basis between the State and Interoil based on available saleable gas, using two separate processing facilities." Right now the "available, saleable gas" seems to be agreed as 9.2Ts at EA. The governmment likely talks to XOM quite regularly and knew back then that XOM was expressing concern in finding enough gas for the very necessary 3rd train. So, the government said, "If there is 9.2Ts at EA and XOM needs 4.6 Ts for an additional train, we want the right to mandate at least 50% of that gas will go to PNG LNG. IOC you can participate in that if things can be worked out with XOM, or you can have the other 4.6Ts for your own plant and it can be in the Gulf."
This well may have evolved into what we see today and IOC obviously likes the idea of working with XOM. The government is supporing this and in the end they may opt in by taking only half of the additional 27.5% (total of 36.25%) on train 3 for PNG LNG leaving IOC/Pac LNG an "equal" 36.25% and Exxon gets the balance of 27.5% (or something along those lines as long as IOC/Pac LNG and the government end up equal and XOM is "happy"). This meets the "two separate processing facilities" statement in the government agreement as PNG LNG would be one and a Gulf LNG project would be the 2nd. Duma obviously does not like this, but he seems to be on the outside right now. But Gulf gets its project with the 2nd 4.6Ts since the government stated in the same agreement that startup could be 3.8 mtpa instead of the original 2009 amount of 7.6 mtpa.
I also believe XOM will have first dibs on the Gulf LNG project, and they'd be crazy not to opt in, even if it's a lower % in the actual plant. They want good returns on projects and if as they drill EA (and possibly other IOC prospects) they will want in. But I agree that Shell is in a similar situation as Duma. They hitched their wagon to Duma, and they suffer a similar fate. I also agree on the buyout; if XOM doesn't do it, I think it doesn't happen. But I think Total is in the on deck circle as far as developing anything XOM decides not to. They made it vey clear that they are very interested in PNG and O'Neill reacted positively. But they also may need XOM to be involved as a recognized operator, or they could bring Shell in.
When the deal with XOM is announced, the muddy waters will clear up substantially.
http://www.pngindustrynews.net/web_multi...ject_2.pdf
This speaks specifically to EA and so far the talks with XOM have centered on EA (drilling, development, etc). I believe that possibly this whole scenario was anticipated by the government and that the 3rd train of PNG LNG was very high on the list. The government stated, "... the project may be commercialized equally and simultaneously on a 50/50 basis between the State and Interoil based on available saleable gas, using two separate processing facilities." Right now the "available, saleable gas" seems to be agreed as 9.2Ts at EA. The governmment likely talks to XOM quite regularly and knew back then that XOM was expressing concern in finding enough gas for the very necessary 3rd train. So, the government said, "If there is 9.2Ts at EA and XOM needs 4.6 Ts for an additional train, we want the right to mandate at least 50% of that gas will go to PNG LNG. IOC you can participate in that if things can be worked out with XOM, or you can have the other 4.6Ts for your own plant and it can be in the Gulf."
This well may have evolved into what we see today and IOC obviously likes the idea of working with XOM. The government is supporing this and in the end they may opt in by taking only half of the additional 27.5% (total of 36.25%) on train 3 for PNG LNG leaving IOC/Pac LNG an "equal" 36.25% and Exxon gets the balance of 27.5% (or something along those lines as long as IOC/Pac LNG and the government end up equal and XOM is "happy"). This meets the "two separate processing facilities" statement in the government agreement as PNG LNG would be one and a Gulf LNG project would be the 2nd. Duma obviously does not like this, but he seems to be on the outside right now. But Gulf gets its project with the 2nd 4.6Ts since the government stated in the same agreement that startup could be 3.8 mtpa instead of the original 2009 amount of 7.6 mtpa.
I also believe XOM will have first dibs on the Gulf LNG project, and they'd be crazy not to opt in, even if it's a lower % in the actual plant. They want good returns on projects and if as they drill EA (and possibly other IOC prospects) they will want in. But I agree that Shell is in a similar situation as Duma. They hitched their wagon to Duma, and they suffer a similar fate. I also agree on the buyout; if XOM doesn't do it, I think it doesn't happen. But I think Total is in the on deck circle as far as developing anything XOM decides not to. They made it vey clear that they are very interested in PNG and O'Neill reacted positively. But they also may need XOM to be involved as a recognized operator, or they could bring Shell in.
When the deal with XOM is announced, the muddy waters will clear up substantially.